Nintendo Falls Amid Questions Whether New Console Can Repeat Wii’s Success
Nintendo Co. fell to the lowest in more than five years after the unveiling of its high-definition video-game console prompted some analysts to question the company’s ability to repeat the success of its Wii model.
The world’s largest maker of video-game players plans to begin selling the WiiU next year, Nintendo said yesterday at the annual Electronic Entertainment Expo in Los Angeles. The motion- sensing device, using a proprietary optical format for games, will be able to play all game titles made for the Wii, said Reggie Fils-Aime, president of Nintendo America.
“There were high expectations from the new version of the Wii and this fell far short,” Yusuke Tsunoda, an analyst at Tokai Tokyo Securities Co., said by phone today. “People had expected to see something more at a big event like the E3, but there wasn’t really anything more than what’s already reported.”
President Satoru Iwata needs the WiiU to revive sales as Kyoto, Japan-based Nintendo’s deliveries have been shrinking for two years. Makers of dedicated hardware including Nintendo and Sony Corp. (6758) face added competition from mobile device makers such as Apple Inc. (AAPL), and from games played on social websites including Facebook Inc.
Nintendo tumbled 5.7 percent to 16,930 yen at the close of trading in Osaka. More than 2.2 million shares changed hands, compared with a six-month daily average of about 720,000.
Nintendo didn’t provide a price for the new console, previously referred to as “Project Café.” The controller has a front-facing digital camera, and features a 6.2-inch touch screen, shoulder firing pads, an expansion SD card slot and game controls on a flat pad. It is the centerpiece of the company’s turnaround strategy, company executives said.
With it, users are able to wirelessly connect to the console and shift content back and forth from a large screen in the living room to the smaller screen. Nintendo developers also demonstrated games in which one person uses the touch screen for cooperative play with up to four others using Wii remote controls. This, for example, would allow one player in a hide- and-seek game to see the whole maze, while her pursuers see only their vantage point.
“As an industry what we haven’t achieved yet is a game platform that is equally satisfying for all players,” Iwata said. “This is exactly what we intend to create with our new home platform.”
Iwata signaled the WiiU will likely be priced at more than 20,000 yen ($250) in Japan when it goes on sale next year, the Nikkei newspaper reported today, citing an interview with the president. Nintendo is unlikely to sell the new console for the same price as the current Wii, the report cited Iwata as saying.
International Business Machines Corp.’s microprocessors will be used in the WiiU system, the Armonk, New York-based company said in a statement.
Competition is increasing for Nintendo. Microsoft Corp. (MSFT)’s Kinect motion-sensing controller and Sony’s Move motion controller, both introduced in the past year, have spurred sales, according to industry tracker NPD Group.
Nintendo, projecting its first annual profit gain in three years, in February began sales of the 3DS model, capable of displaying images in three dimensions. The company has forecast sales of its handheld 3DS player to climb to 16 million units in the fiscal year ending in March.
The $250 3DS, which went on sales in the U.S., Europe and Japan this year, competes with Apple’s iPhone and smartphones using Google Inc.’s Android software, which have attracted gamers with third-party applications.
Nintendo must woo casual users with technology that differentiates it from competitors, Yuki Nakayasu, an analyst at UBS AG in Tokyo, said in a June 2 note to investors. He has a “buy” rating on Nintendo’s shares.
“The new platform will provide deeper game experiences than what even the most passionate gamer have realized before,” Iwata said yesterday. “It will let everyone see games in a different way.”